At the times when the global food supply chains were disturbed due to the widespread coronavirus epidemic, Russia has made a shipment of 60,000-ton cargo of wheat to Saudi Arabia from a Black Sea port, seven months after the trade restrictions were lifted.
Analysts suggested the condition of future supplies from Russia to Saudi Arabia would depend on the quality controls of wheat. With the latest development between the two countries, Saudi Arabia is considering investment projects in the Russian agricultural sector.
Moscow-Riyadh Food Trade
A Middle East-based trader said, “In these difficult times, food systems supply chains should remain open and resilient beyond political ideologies.” Russia, being the world’s largest wheat exporter, had been looking for an opportunity to access the Saudi market along with ongoing efforts to gain access to Algeria and Iraq. According to a source, If Riyadh seemed to accept the initial cargo shipment, then large volumes of wheat would be coming from Russia in the near future.
Last August, Saudi Arabia had lifted the imposition of restrictions against Russia to ensure a smooth flow of Russian agricultural products, especially wheat as a sign of strengthening ties with Moscow beyond cooperation on oil, weeks before Russian President Vladimir Putin visited the country.
The source said that the shipment represented another crucial moment in relations between Moscow and Riyadh as the two major oil exporters had been showing a difference of opinions regarding the oil output cutting amid the price of global oil dropped substantially due to the virus outbreak.
Future Supplies Depending on Wheat Quality
A German trader said, “I think exporters of Russian wheat have been worried that cargos could be rejected by Saudi Arabia if there are disagreements about quality as has been seen in the past in Egypt.” He added that such rejections could cause a financial setback for the seller, who would be facing extra port costs as well as the challenges of re-selling a consignment which has been spurned as below-standard by one buyer.
However, the trader viewed, “But it looks like the quality of Russian wheat is judged to be good enough to meet the Saudi standards. If Russian wheat is accepted by Saudi inspectors I think more will follow.” Russia’s agriculture safety watchdog, Rosselkhoznadzor, clarified that the country’s specialists conducted preliminary checks and made confirmed that wheat in the supply met Saudi requirements.
A source claimed that Saudi’s demand for food products would remain a key priority since the kingdom aimed at storing more reserve food grains during the lockdown of the COVID-19 epidemic. Moreover, Saudi state grain buyer, SAGO stated earlier this week that the kingdom’s agricultural arm would be seeking an investment in farmland overseas to import 355,000 tons of wheat into the kingdom especially in Russian farmland.
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